Author: Chris Boggs

Three issues ago the VU presented a Point/Counterpoint article discussing a carrier's response to an agent of record (AOR) letter if the incumbent agent would not agree to release the business. The question revolved around the insured's desires and the carrier's duty to comply with those desires. Here is a link back to the discussion if you missed it.

We asked readers to provide feed back and opinion. Following are a couple responses we received as a result:

• Interesting discussion. I've always felt, as a general rule of thumb, if you have to explore whether or not something is legal, it probably isn't a practice we should engage in regardless. I'm sure there are some scenarios where a carrier would have legitimate concerns on honoring an AOR, but simply because the incumbent is a preferred agency is one that I would have a hard time with as an agent or insured. As the agent I'd be thinking twice about placing any new business with the carrier, and as the insured I'd be constantly looking for a new carrier. 
  
  The scenario reminds me a little of a carrier we have represented for decades. Several years ago they announced that they were giving a large regional agency the exclusive right to write a very specific class of contractors. To all of their other contracted agents, they were no longer allowed to submit business in this class. That alone did not sit well with me, but the fact that we had several clients that operated in this class really left a bad taste in my mouth. This wasn't a case where the agency had some unique expertise in the class. It was just cronyism.
  
  
• Af​ter reading the point and counterpoint I have to lean with David Walker……mostly. Not to be a fence sitter but I agree with points on both sides.
  

1. I do not see that it would be a violation of any contract law because of Dave's point there is nothing in the insurance contract that obligates the insurer to accept an AOR.
   
   
2. Agency – Company contracts are at the heart of the independent agency system, special considerations for certain “goal met" agencies included. This creates a strong working relationship between the two, which then allows the agency to do the best they can for the insured (who I agree, best interests should be the first consideration). 
   
   
3. On the other hand, I do have a bit of an ethical dilemma of trying to keep an insured with an agency that they no longer want to do business with. The specific circumstances need to be taken into consideration. 

​​​​​I would not want to continue a business relationship with someone who doesn't want to work with me, and would not withhold agreement to the change on that basis. Unfortunately, sometimes clients have been led to believe a benefit to the change that doesn't actually exist, so while they weren't unhappy with the relat​ionship. In that case a countermanding AOR can be submitted. If I can't convince them to stay with me, I'm going to let them go, hopefully on good terms…you never know when things will change, and people talk. Reputation is a big part of business.  

​Just my humble opinion.